The EUR/USD will start a new week with likely heavy volatility on Monday as the market continues to digest the outlook to what the EU leaders presented.
Basically, the EU summit did not bring a big “bazooka” as needed but also till now fell short of a major selloff for the market and that is what Monday will be all about to define the final reaction to the presented measures.
The intergovernmental treaty that is for now including the 17-euro nations and under the considerations of the remaining 9 nations left theUKthe only hurdle to a full EU treaty change, but the tighter fiscal union is still ongoing even ifUKopted to stand out.
The IMF is to receive another 200 billion euro of support and the ESM will be rushed till mid next year and both the EFSF and the ESM will be under ECB management which is mostly the very cheerful news, but till now the leaders and the ECB are very clear the bank is still not the party to save the crisis by purchasing bonds.
Therefore, the eyes will be on the debt sales from Italy and France on Monday especially after the summit and the commitment clearly from all the members to the euro, where speculating the euro is to fall is likely illogical now since the countries are even signing up for greater bonds!
We need to keep a watch on the rating agencies for their view of the decisions and especially S&P that already flattered 15 euro zone nations with the warning and if they assure that the measures are fruitless then we might be surprised this week with a really catastrophic downgrade!
TheUnited Stateswill start this week at 19:00 GMT with the monthly budget statement for November, where the budget deficit could have narrowed to $140.0 billion from $150.4 billion.
Originally posted here
